Symposium | Beyond Neoliberalism

Building Post-Neoliberal Institutions

By Felicia Wong

Tagged Institutionsneoliberalism

After decades in the wilderness, critics of neoliberalism have reason to hope. Yes, the world is in chaos. But chaos provides an opening: We are (almost) ready to move beyond criticism of neoliberals and the world they have wrought to an affirmative alternate vision, something more positive and more generative.

Scores of post-neoliberal ideas, from worldviews to policy proposals, bubble just below the surface of the everyday. Neoliberalism has long had its critics, people who have argued against market fundamentalism and pointed out its systemic flaws. But those critics have been moving closer to the heart of mainstream discussion for at least a decade. The financial crisis of 2008 and the election of 2016 were major turning points. Since the ascendance of Donald Trump to the presidency, and even amidst all of the deliberate crises that he and his Administration have created, or perhaps because of them, our political debate has become a contest of innovative big ideas—mostly, but not exclusively, on the progressive left. Some ideas that were considered laughable a few short years ago but are now part of day-to-day conversation—most notably proposals for far higher wealth and capital taxation, and ambitious public efforts to combat climate change or to expand public programs like free college and Medicare—are distinctly not neoliberal. Post-neoliberals are beginning to break through.

This should provide some reassurance: A new world is within our imaginative powers. It is burbling around the academy. Economists think about power. Political scientists think about economics. And “neoliberalism” has become both the bête noire and term of art in mainstream commentary everywhere.

The intellectual argument will and should continue. It’s fruitful, with a healthy balance of productive agreement and also room for debate. However, now is the time to focus not only on ideas, but also on strategy: organizing, and building the kinds of alliances that can develop into robust networks, institutions, and political power. Because with the world in crisis, the urgent question is how we get from here to there.

On this front, we can learn from the neoliberals themselves. Neoliberalism began in the late 1940s as a loosely organized intellectual philosophy rooted in economics. But it gained power and salience only once the ideas took institutional forms in the 1960s and ’70s. As the ideology began to find a more popular voice, it may have lost some intellectual cohesion and purity, but it more than made up for that loss in the influence that comes from speaking effectively to different groups. Neoliberalism was no longer confined to 39 scholars—38 of them white men—meeting at the Hôtel du Parc in Mont Pèlerin, Switzerland in 1947, or to the economics department at the University of Chicago in the years shortly thereafter. By the early 1970s, neoliberal ideas were beginning to reach a broader cross section of Americans: white middle-class homeowners; executives at the U.S. Chamber of Commerce; leaders of the nascent but growing evangelical “Jesus movement.”

This is about more than political alliances, although it is certainly that. The diversity of the neoliberal coalition ultimately strengthened the ideology in the face of policy and even political failure. Neither contrary economic evidence nor electoral losses slowed neoliberalism down, precisely because of the range and breadth of its institutional forms.

As we seek to build power for the post-neoliberal ideology that is starting to emerge from thinkers, we must now turn our attention to social and political groups, and the institutional ways in which they structure our thinking about how the world currently works, and how it ought to work. This essay envisions the “what” and the “how” of a world beyond neoliberalism: not just the ideas, but also the politics and institutions of a world that remains just out of reach.

Figuring out the ideas, the politics, and the institutions all at once is tough. But we do not have the luxury of time. Today is our 1947, the time when neoliberalism was at its intellectual beginnings. Today, though, it is neoliberalism’s critics and post-neoliberalism’s visionaries who are just starting to meet, confer, and organize in deliberate ways. Discussions about the shape and substance of a robust neoliberal alternative are fledgling, but they are happening. Yet today is also our 1974, when neoliberalism began its march to political dominance. Now, as then, American culture is at war with itself, and the core institutions of our politics—the presidency, the justice system—are in turmoil.

The road ahead is perilous. Looking at the story of the neoliberal order’s construction provides a road map. The neoliberals were unlikely allies. But in the end, intellectuals, movement leaders, and politicians built common bonds and lasting institutions that allowed the neoliberal ideology to take power, and to hold sway even after the economic ideas themselves lost explanatory and predictive power. We can learn from their history.

Neoliberalism: Beyond Economics, Movement Fuel

We often use “neoliberalism” as a shorthand for conservative economics—the idea that lower taxes and smaller government will lead to a vibrant private sector and better economic outcomes for all. But neoliberalism really isn’t just conservative economics. It was, and remains, a shape-shifting coalition that brought together strange, but ultimately oddly compatible bedfellows. (In the 1980s, some liberals, like Washington Monthly founding editor Charles Peters, also laid claim to the term, but they meant it differently—Peters and his circle were centrist liberals.)

Neoliberalism’s Language–Social Values

Neoliberalism speaks in a language rooted in values and a vision for society. Its central moral claim, essential to its popular appeal, was economic liberty. This liberty-focused form of freedom centered on an individual’s right to contract and the importance of property ownership. Economic liberty was, for neoliberals, a precondition of all other more political freedoms. This is not the only way of conceptualizing freedom—consider the freedom of the abolition movement, or women’s liberation, or Franklin Roosevelt’s Four Freedoms and his economic bill of rights—but it continues to dominate everyday thinking, especially in the United States, to an astonishing degree.

Neoliberalism’s vision for society made the market the prime organizing mechanism. By privileging markets above all other institutions, neoliberalism created a confusing, and contradictory, but ultimately extremely effective view of government. On the one hand, neoliberalism denigrates government. Anything that strays from market centrism is at best dismissed as inefficient and woolly-headed, and at worst demonized as collectivist socialism. On the other hand, neoliberalism is hardly anti-state. Neoliberals, as the historian Quinn Slobodian argues, built their project by using the state to “encase” markets in order to protect them from democratic challenges. This anti-state/strong-state paradox is a powerful, albeit perplexing, element of the ideology.

The economic expression of neoliberalism’s language came first, certainly, with the now-famed 1947 gathering at Mont Pèlerin and the development of “Chicago School” economics and the University of Virginia branch in the subsequent years. But neoliberalism became political movement fuel more than two decades after the Mont Pelerin Society was founded.

Neoliberalism’s Pivot–and Rise to Power

One important telling of neoliberalism’s rise centers on Keynesianism, which by the early 1970s was struggling to explain the economy. Keynesians had no response to the oil shocks of 1973, and the resultant stagflation; the consumer price index inflation nearing 10 percent by 1974 was likewise inexplicable. The failure of Keynesianism is certainly a key part of the story. But the reality is more complicated. The chaos of the late 1960s and early 1970s was not just economic. It was all encompassing. There was drastic change in race and gender roles and family norms, in America’s role in the world, and in cherished political institutions—all at once.

First and foremost, the era was violent. Vietnam was wrenching, and also begat violence at home. At Kent State in May 1970, the fact that upstanding Midwestern college students could become radicalized was so shocking that ordinary Americans told reporters that they were sorry the National Guard “didn’t kill more.” Before that was the assassination of Martin Luther King Jr., and the assassination of Bobby Kennedy. Violence was pervasive. From January 1969 through mid-1970, the United States sustained 4,330 bombings, resulting in 43 deaths.

Racial suppression also led to violence—the Watts uprising (or riots; the description is debated) in 1965; Detroit in 1967. The changing racial order ignited backlash. Housing desegregation drove white flight; school desegregation and busing drove “Massive Resistance” throughout the south (Virginia’s elected officials closed schools rather than integrating them) and violent resistance in cities from Boston to New York. At the same time, the American presidency itself was under siege. With the publication of the Pentagon Papers in 1971, America learned that two presidents lied about the Vietnam War. By 1974, we had Watergate, and the resignation of both Spiro Agnew and Richard Nixon.

In short: By the early 1970s, the world as Americans knew it was coming apart. This was especially so for a white middle class that had known lasting economic and social stability. (Historian N.D.B. Connolly describes neoliberalism as “white flight from liberalism.”) The era was also destabilizing for black Americans who had never known economic or social steadiness. For many, it must have felt like a revolution from within, driven by the radicalization of their own children. The civil rights movement was led by young men and women in their 20s. The New Left; The Weather Underground. And, though it sounds quaint today: boys with long hair, girls with legally available contraception, and sex education in the classroom—these became central political issues for the emerging New Right, vestiges of which remain in the bitter fight over reproductive rights today. Part of what was going on was a fight over the fundamentals of American identity. From Vietnam to the disputes between parents and their children, which Americans could claim with certainty that their beliefs were right?

The counterstrategy focused, in large part, on the supercharging of traditional business, and an economics that supported private business interests. This, adherents believed, could be the bulwark against both economic chaos and social radicalism—bringing peace and prosperity, but also a reminder of stable, enduring American values.

The 1971 Powell Memo, one of the most famous conservative documents of its time, makes this jumble of issues and perspectives—economic, social, moral—clear. Today, most progressives remember the memo as a blueprint on how to save “free enterprise capitalism.” But Lewis Powell’s note to the Education Committee of the U.S. Chamber of Commerce was less about the economy, and instead unusually attuned to social decay. Powell writes of left-leaning students as revolutionaries—communists who are attacking Bank of America branches with fire bombs. He frets that “news stands—at airports, drugstores, and elsewhere—are filled with paperbacks and pamphlets advocating everything from revolution to erotic free love. One finds almost no attractive, well-written paperbacks or pamphlets on ‘our side.’” In response, he urges the Chamber to organize, which would be funded and led by the “top management of blue chip businesses.”

Powell was not a Republican, but a traditional Southern Democrat, and would soon become a swing vote on the Supreme Court—hardly a movement conservative. He was seeking order, not counterrevolution. But his thinking paralleled those farther right, especially evangelical Christians, who were animated by the same combination of economic and social issues. As Lisa McGirr masterfully describes, activists who had once campaigned for Barry Goldwater as staunch anti-communists, often John Birch Society members, were by the 1970s concerning themselves with “domestic corruption.” “Obscenity, sex education, abortion” were the new targets of attack for activists who had previously championed Ayn Rand and Friedrich Hayek, and who equated “the growth of the welfare state with Socialism and Socialism with Communism.”

Neoliberalism’s Four Faces: Take What You Want, Leave the Rest

So, by the 1970s, the problem to be solved wasn’t only inflation. And it wasn’t just the Keynesianism that had plagued many at Mont Pèlerin. The crux of the matter was the entire public-minded governing philosophy ushered in by Franklin Roosevelt’s New Deal—taxation, regulation, and expansion of social insurance. The 1930s-era government-led economic recovery plan had, by the 1970s, combined with rights movements—civil rights, feminism, the youth movement—to encourage upheaval and ultimately violence abroad, and more menacingly, at home.

The neoliberal answer was to return to a form of traditional private sector stewardship of the economy. That stewardship, according to both Lewis Powell and movement conservative activists and evangelicals, should be funded, nurtured, and shaped by movement organizations of all types, including religious institutions that became megachurches with broadcasts reaching tens of millions of people, as well as political actors—like Ronald Reagan, governor and movie star—who could actually take power and build governmental institutions to suit their own pro-business mindset.

The power of this alliance was that it enabled huge neoliberal-inspired movement success, even as neoliberal economics itself did more poorly than advertised. Ronald Reagan’s tax cuts, for example, were not successful on purely economic terms (any economic “boom” from the 1980s was due to a range of factors, including federal defense spending), did not pay for themselves, and, in fact, the Reagan Administration raised taxes from 1982-84 and in 1987 to make up for the fast-growing federal deficit. George H.W. Bush raised taxes, after famously promising not to, in 1990. And Bill Clinton did so again in 1993. But the myths—Reagan the tax-cutter and our greatest President, tax cuts fueling growth—continue.

It should also be noted that neoliberalism had plenty of empirical failures based even on its own predictions. As Mike Konczal and Katy Milani note: We saw less GDP growth—an average of 2.5 percent as compared to 3.9 percent—in neoliberalism’s post-1980 heyday. The top marginal tax rate cuts expounded by neoliberals don’t lead to more growth, but are correlated with an increase in the income share of the top 1 percent. Neoliberalism was supposed to help compete away racial discrimination in the labor market, but income and wealth disparities by race have worsened since 1980.

But in a “take what you want, leave the rest” world of powerful alliances and institutions, neoliberalism’s shape-shifting abilities made it sticky. Marketized thinking became part of both parties. An evangelicalism that began in the 1960s as a way to welcome wayward, “barefoot youth” back to Christ became the prosperity gospel equating personal worth with financial success; today, evangelicals continue to vote overwhelmingly Republican. Our nation’s leading politicians—our presidents, from Nixon to Reagan to Clinton—racialized the notion of “public” (“welfare queens,” for example), and ensured that white fear of black crime morphed into “three strikes” criminal justice laws and then into privatized prisons. Each piece of this can be traced back to neoliberalism’s basic precepts, but of course went far beyond what Friedrich Hayek, Milton Friedman, or Lewis Powell could have imagined.

What Comes After

The point of highlighting various modern forms of marketized thinking is not to indict all of the ills of modern conservatism—indeed, of contemporary mainstream politics—under a single ideology. It is, however, to remind us of the economic worldview roots of much that isn’t obviously economic. It is also to suggest that whatever comes after neoliberalism has to incorporate the role of political alliances, institution-building, politicians, and policy ideas into its form.

Increasing Strength: Academic Disciplines, Idea Generation, and Policies.

Today, it is post-neoliberalism that is in an exciting, almost-out-of-the-wilderness, arguing-with-ourselves phase. We agree on plenty: the economic, social, and moral failure of market fundamentalism; the need to resurrect democracy against domination and to understand the democracy fight and the economic fight as one and the same; and the need for common values as part of our own statement of aims.

As was true for the neoliberals of 1947, we also have our own tensions. Are we in favor of more decentralization and community control (the Dakota Pipeline fight, 350.org) or more centralized decision-making (Green New Deal industrial policy focused on the transformation of our energy grid)? Should we focus on more worker democracy and ownership (collectivists and network pragmatists) or more modern, sectoral, and inclusive federal labor law (a Wagner Act for the twenty-first century)?

The most important forward movement in the post-neoliberal world is in fact in the economics profession itself. A decade after the financial crisis laid bare the dysfunction of the entire global political economy, a new generation of academic economists has grown to prominence. Organized by upstart networks like Economists for Inclusive Prosperity and the Washington Center for Equitable Growth, they are disdainful of neoliberalism’s market fetishism. Using new economic tools and asking new questions, this next generation of academics has systematically shown just how wrong neoliberalism’s economic conservatism is. This group of upstarts will undoubtedly face real obstacles in the mainstream of the profession, but they are at the nation’s leading research institutions and represent a new wave.

We are also seeing a much more creative, contra-neoliberal fusion of law and economics, as articulated in law and political economy manifestos by some in the field. This group of younger scholars begins with the presumption that law is the “mediating institution that ties together politics and economics,” and if it continues to prioritize efficiency and treat it as a neutral value, law will keep driving crises of economic, social, and racial inequality.

The thinking from these economists and lawyers is moving quickly to influence real-world policy and political shifts: A new focus on antitrust and monopolies in federal politics has Democratic candidates on the left and in the middle railing against the strictures of the consumer welfare standard and calling for breaking up Big Tech, industrial agriculture, and pharmaceuticals. Some lawmakers are calling for public banking, massive public investment in green infrastructure, and publicly provided health insurance. These are all post-neoliberal proposals, and they have become increasingly commonplace.

Revolutions in the economic and legal academies are essential to building a better political economy. And so, of course, are policies. But if we are truly to move past the neoliberal era to build something new, we must remember that although economics per se is always a central talisman of politics, political ideologies stretch beyond economics and beyond economists—and then gain real power. Neoliberalism’s diverse allies stitched together a common underlying understanding about how the world works, where prosperity comes from, the role of individuals, families, markets, and governments. Ultimately those shared beliefs grew and endured because they were reinforced and reproduced by day-to-day institutions, practices, and norms.

Those are the transmission belts of ideological power.

Pervasive Weakness: Political Institutions, Social Norms

Today, post-neoliberals are just beginning to recognize themselves as such. In that sense, we are, once again, in 1947. But the political moment has all of the elements of 1970s chaos: a morally hollow, bankrupt presidency; a movement of young people who don’t hold the same basic understandings or beliefs systems as their parents; a palpable political vacuum in both major political parties; the desperate desire, from all quarters, for leadership and a way forward; and threats of violence and domestic terror on the rise.

As the tectonic plates shift, neoliberalism may have lost its explanatory and intellectual power, and new thinking may in fact be rising. That is a necessary step, but it is not sufficient. Neoliberal institutions remain strong exactly where post-neoliberal (or at least non-neoliberal) institutions are weakest. Large, profitable, often extractive private corporations hold more market power than ever. Any hope of countering this with public power will first require digging out of a ditch decades in the making.

The court system, from the Supreme Court on down, holds to a doctrine that is clearly pro-business and anti-labor. The Department of Justice Antitrust Division, the Federal Trade Commission (FTC), the Federal Communications Commission, the Treasury Department, the Department of Commerce, the U.S. Trade Representative, the White House National Economic Council: All of these government agencies and institutions are certainly, in the Trump Administration, neoliberal. But even in previous administrations, Democrat and Republican, neoliberal beliefs about the primacy of the private sector and the secondary (at best) role of workers, consumers, and citizens dominated. The “consumer welfare standard” held that only price—and not worker well-being, community well-being, or long-term investment—matter in making merger and acquisition decisions. Split decision-making power across the DOJ, the FTC, and a range of sector-specific agencies (Department of Transportation for airlines, Department of Agriculture for livestock, etc.) make for diffuse, ineffective decision-making, and the five-member FTC structure makes split voting, and status-quo outcomes, the norm. Consumer voice and input is muted at best, and worker and citizen voice is nonexistent.

Outside of government, progressive nonprofit organizations are growing, and some—especially economic policy groups—are working in more alignment than ever before. But large-scale worker organizations, including formal labor unions, are on the ropes, with membership at an all-time low. Progressive legal organizations have made no progress in changing either jurisprudence or judicial selection.

Further, the social belief system of neoliberalism remains pervasive. Certainly, newer thinkers do not have the institutional equivalent of evangelical churches, which preach a capitalist gospel and at the same time drive turnout for conservative Republicans. Still, in many areas neoliberal beliefs prevail: One of the most fundamental such beliefs concerns the social value of human beings as human capital. As a result, our schools—certainly our most prevalent public institutions, in every neighborhood, working with tens of millions of American families every day—focus on educational “return on investment” as heavily predicated on students’ lifetime earnings in the labor market. Similarly, as Wendy Brown has argued, our understanding of democratic politics and democratic participation, per the Citizens United Supreme Court decision, “presents speech as a capital right, and political life and elections as marketplaces.” Our neoliberal understanding of democracy, and speech within a democracy, is not about self-rule, or building the demos, but about value enhancement in a competitive marketplace.

The argument here is not that post-neoliberals need to mimic exactly what neoliberals did to gain power. After all, it’s not clear that they had a road map that pointed from Mont Pèlerin to Ronald Reagan, much less the Crystal Cathedral of the 1980s and today’s network of evangelical megachurches. But even as we continue to refine the economics and the political philosophy, we must remember the importance of building social and institutional power. We should be attentive to the not obviously economic vectors of change—how we establish and fund our public schools, or how we build regulatory institutions that serve the public. These institutions shape our decisions and our very sense of what “normal” problem-solving is in our political economy.

As this essay asserted at the outset, today is both 1947 and 1974. Our ideas are nascent, and more exciting and interesting than they have been in at least a generation, at the same time that our politics have gone up in flames. We don’t have the luxury of time that the Mont Pèlerins did. Can we build new institutions while we simultaneously sort out new ideas?

It is, to put it mildly, a tall order. Both of our biggest political institutions, the Democratic and Republican parties, have been neoliberal (on both the right and left, though right neoliberalism has presided over far more egregious outcomes) for the last half dozen presidential administrations—as long as anyone active in politics today can remember. Countering widely held beliefs and norms is no easy task.

Post-2016, new progressive organizations seem to be on the rise. We are building relationships, networks, and knowledge that could be anti-neoliberal. But we lack a language, or even a name, for what this movement, as a whole, might be or look like. Our campaigns remain single issue—guns, choice, climate are still the ways in which we organize our political thinking and political practices. Even “economic policy” is reduced to a silo. We do not, as a movement, know how to argue for basic structural changes in the conduct of politics itself, and thus in how the economy is conceptualized and managed. And we certainly do not have institutions that are practiced in so doing.

It is not clear what the new institutions will be. But it is clear that we will need them. Imagine a pro-public equivalent of the Chamber of Commerce (which advocates not for a single industry, but for business qua business). Consider the countervailing power of a multimillion member organization spending hundreds of millions annually, in an organized fashion, to advocate not on environmental or reproductive health or any other single issue, but instead connecting those dots to argue for public-focused structures—for government itself. Perhaps some of the new networks like Indivisible, with thousands of local groups and millions of members, or Rev. William Barber’s Poor People’s Campaign—will be able to work in concert with longer-standing organizing networks. Perhaps they could even establish, or work within, physical places where people of faith or shared values can gather. The “values” piece, of course, is essential. For these organizations and their leaders to truly counteract neoliberalism, they must share a common moral understanding of our economy, our society, and the role of an active government in our politics.

Government institutions matter too. When Franklin Roosevelt built the New Deal, he started more than 100 new government agencies. Today, that is startling. Some of Roosevelt’s institutions have disappeared into the mists of time: the Federal Theater Project, the Civilian Conservation Corps. But some remain: the National Labor Relations Board, the Securities and Exchange Commission, the Federal Communications Commission. How will we use or remake existing government entities, and what will our new institutions be?

For new ideas to take root, they need institutions within which to grow and flourish. Therefore, we need to be imaginative in our institution-building, and two principles should guide us.

First, privilege human beings and human well-being, not markets per se (and actually not government per se, either). It is less about whether our new ideas are “socialist” or “capitalist.” But we would do well to remember that the 1940s neoliberals began with moral assertions about economic freedom as a precondition. Or, perhaps more inspiring to us, the civil rights movement began with a fundamental assertion, both economic and political, both human and moral: Every person has worth, value, and dignity. That animating value, and a network of churches within which that value could grow, changed history.

Second, any new institutions must be alert to the realities of power: the importance of countervailing power, and of stewarding power well. Politics, after all, is about power at its core. Neoliberal intellectuals tried to assume away power, and built an entire discipline and way of thinking that competes power away. But neoliberal real-world actors used that as a vacuum to build vast institutional networks that are about nothing but power—the Chamber of Commerce, the American Legislative Exchange Council, Americans for Prosperity—while at the same time marketizing government such that most of its decisions are made in the service of private actors—large corporations with armies of lobbyists—rather than in the public good. To get better economic and social outcomes, government simply must be structured to do its job, and led by people who understand what that job is and don’t act as handmaidens for an increasingly rent-seeking corporate sector.

Post-neoliberals must put people at the heart of their endeavor. And we must build institutions of our own that contest for power rather than seek some mythical “middle” from the outset. The world at large is still neoliberal. Because of that, any “middle” is going to start from within a markets-first framework, and any outcome will therefore subsume common-good government action within marketized policy mechanisms: subsidies, vouchers, and tax credits, which we know are all neoliberal and insufficient in terms of delivering actual results. Our new institutions, and the norms embedded within them, should begin with realities of challenging for power (and not a “not red America, not blue America, but one America” ideal that sounds terrific but ends up, when legislation is actually on the table, negotiating against itself). Stewarding power well is essential. But imagining that it does not exist is naïve, and ultimately foolish.

In the end, the ideas did come first for neoliberals. As we build a post-neoliberal world, the ideas framework has already come before any genuine institution building. We must continue to sharpen those ideas, and ensure that they become a common, and commonly understood, language. We are on the cusp of new vernacular. That vernacular should drive institutions, because institutions provide the day-to-day within which ideas are tested, normalized, and passed on. The core power of ideas, as Hewlett Foundation President Larry Kramer has noted, isn’t to be right or wrong. It is to tilt the playing field for or against certain claims. By this light, a post-neoliberal world is already dawning.

It is time to turn to strategy—organizing and building the kinds of friendships, networks, alliances, and institutions that will make these ideas real.

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Felicia Wong is President and CEO of the Roosevelt Institute and co-author of The Hidden Rules of Race: Barriers to an Inclusive Economy. Her work focuses on the demise of the mid-century liberal consensus for the politics of race and economics in the United States.

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